The author of "Rich Dad, Poor Dad," who came to fame with the assistance of big-name celebrities such as Donald Trump, has taken one of his companies into bankruptcy after a judgment was issued against the business. Though the Chapter 7 filing was for the benefit of one of the owner's companies, it is similar to those that are filed by individuals in California. Like an individual bankruptcy, the filing is intended to assist with protection from creditors.
The Rich Global LLC company filed for Chapter 7 bankruptcy after a company called Learning Annex won an award for damages of more than $20 million against Rich Global. The judgment apparently resulted in more liabilities than Rich Global could handle. In fact, in its Chapter 7 filing, the company listed assets of $1.8 million and liabilities of $26 million. The liability amount included the $23.7 million damage award.
As many in California know all too well, it can be difficult to repay creditors when the amount of debt exceeds the amount of income and assets that a person has in possession. When this is the case, Chapter 7 may be a good choice due to the protections offered under bankruptcy law.
Filing for a Chapter 7 bankruptcy can be an emotional decision for both commercial and individual debtors. However, when the sheer amount of debt makes it impossible for people to repay their financial obligations, bankruptcy can assist with protecting debtors from harassing creditors who will do just about anything to pursue debt collection. In fact, bankruptcy, once completed, can help both individuals and small businesses begin new financial futures.
Source: ABC News, "'Rich Dad, Poor Dad' Author Files for Bankruptcy," Susanna Kim, Oct. 12, 2012